AUD/USD Weakens Under Pressure from Greenback Strength
The Australian dollar weakened below $0.705 on Thursday (June 18th) and returned to a more than two-month low. The main pressure came from the strengthening US dollar after the Federal Reserve kept interest rates unchanged but signaled that a hike was still possible by the end of the year.
Half of the FOMC members expect at least one rate hike this year as inflation concerns remain high. New Fed Chair Kevin Warsh has also shifted the central bank's communication style by reducing forward guidance and emphasizing a more cautious approach and a focus on inflation.
In Australia, the Reserve Bank of Australia remains hawkish in its stance to contain inflation. Governor Michele Bullock emphasized that inflation remains too high and additional interest rate hikes cannot be ruled out.
Although the market is beginning to assess the RBA's tightening cycle is nearing completion, the probability of one final hike this year remains around 50%. However, the chance of a hike in August is only around 25%. The market's next focus will be on the direction of the US dollar, the Fed's signals, and Australian inflation data to assess the AUD/USD's room for movement. (asd)
Source: Newsmaker.id
